Video Games: Not Just for Consoles, PCs Anymore
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Video games are rapidly making a move into the online arena, which has many firms in the space salivating at the thought of establishing recurring revenue streams in a market that has already surpassed the Hollywood box office in terms of annual revenues. Many PC games already offer online options, and the big three console makers are pushing to bring their players online, but both groups may be facing competition from a new direction: set-top boxes which offer on-demand gaming.
UK-based Pace Micro Technology Thursday unveiled its new IPTV home gateways: set-top boxes which allow telecommunications and IP broadband service providers the ability to deliver "advanced PC-style video games with full 3D graphics and stereo-sound" without the need for video game consoles or PCs. Pace said service providers can use its gateways to provide on-demand access, through television, to everything from simple card and board games to 3D multi-player titles. In addition, the gateways offer access to core IPTV capabilities such as true and near video-on-demand, e-mail, Internet browser services and karaoke-on-demand.
"The market opportunity for games-on-demand in the TV space could quickly grow larger than the initial PC-centric services offered by broadband operators and products like Pace's IPTV gateway range will be critical in realizing this vision," said Ben Keen, director Screen Digest, a London-based research firm focused on audio/visual media.
Indeed, the video game market is big business. It racked up $9.3 billion in revenues last year, outgunning Hollywood's box office take of $8.1 billion by a cool billion dollars. According to research firm InStat/MDR, console games accounted for nearly $7.4 billion in revenue in 2001. While the online segment is still nascent, Screen Digest predicts online game revenues will be more than $1 billion by 2006. Currently, the best-known online game in the U.S. is Sony's EverQuest, a subscription-based massively multi-player online roleplaying game that draws 430,000 players worldwide who not only buy the software but pay $13 a month to play in the online realm.
G-cluster processes games on its server platform, which then transmits sound and images to players' set-top boxes in real-time using MPEG streams. IP providers can install G-cluster's gaming systems directly to their server head-ends. If they have already deployed Pace's IPTV gateways in customers homes, this will allow them to provide the new services without resorting to engineer installation visits.
Customers can plug joysticks and game pads into existing expansion ports on Pace's IPTV gateways.
But while Pace aims to bypass the console-makers and PC gaming firms, competitors are not sitting still. Sony Computer Entertainment Europe Thursday announced that the Network Adaptor which turns its PlayStation 2 console into an online gaming platform will be available in European retail channels in Spring 2003. Sony launched the Network Adaptor in the U.S. in August. Its strategy is simply to provide players with the ability to go online with their consoles. Customers will have to find their own service providers, and it will be up to game publishers to provide the infrastructure to support their games online. The Network Adaptor, which costs about the same as a PlayStation 2 game, offers both ADSL and cable broadband connectivity, and comes with an online-enabled game as well as a utility disk.
Microsoft, which plans to launch its Xbox Live network on Nov. 15, has taken a different tack. To access the service when it launches, gamers will have to buy a $49.95 starter kit, which includes 12 month's worth of access to the service and a headset kit for voice communications. Through the service, Microsoft will provide network connectivity and the underlying infrastructure for game publishers. Microsoft announced last month that it will throw the switch on Xbox Live in the UK in March 2003, followed by other European countries.
Nintendo, whose strategy resembles Sony's, unveiled its online add-ons Wednesday: a mobile for dial-up Internet access and a network adaptor for DSL or cable connectivity. Each goes for $35.
continues to pursue its own niche
with its RealOne Arcade service -- a pure Internet play. On Thursday it
signed an exclusive distribution agreement with Flipside, operated by
Vivendi Universal Net USA Group. The agreement gives RealOne Arcade users
access to Flipside's cash and competition tournaments, which allow players
to wager when playing online games of skill, including puzzle, logic,
arcade and other games.